Live: Thursday, February 27, 2020

7:45 p.m. New York time

And now the exciting part of the day. The S&P500 closed below the average price of the past 200 days — a moving average. This is only the sixth time that has happened after January 2009, when a below average close kicked off the crash of the Great Recession. Since, a move below the 200 day moving average has happened in June 2010, August 2011, August 2015, October 2018, May 2019, and now, today.

Some were short-term sojourns below the moving average. The 2019, 2015 and 2011 declines were significant. The 2009 drop below the moving average accompanied the Great Recession, which had and is still has an impact on our lives.

Screen Shot 2020-02-27 at 4.40.54 PM

7:20 p.m. New York time

Three additional stock positions triggered their stops shortly before the closing bell. Here are the results:

  • AEL in the Growth Portfolio, sold for a $27.19 credit per share, down $5.91 from the entry price, a 17.9% loss over seven days for a -931% annual rate.
  • KBH in Value, for a $343.83 credit, down $5.10 from the entry price, a 12.8% loss over seven days for a -666% annual rate.
  • RL in the S&P 500, for a $102.37 credit, down $19.60 from the entry price, down 16.1% over 13 days for a -451% annual rate.

I have three stock positions left, not counting my new grown income positions in TLT, the long-term Treasury bonds exchange-funded fund. Those left are AAPL in the Genetics, Robotics and S&P 500 portfolios, QRVO in the S&P 500, and TSM in Robotics.

4:10 p.m. New York time

AEL, KBH and RL hit their stops. Results to come.

1:35 p.m. New York time

INVA in the Momentum Portfolio has triggered its stop/loss, for a $14.03 credit per share, down $1.22 from the entry price. The position sustained an 8.0% loss over six days for a -487% annual rate.

1:10 p.m. New York time

BRY in the Value Portfolio has triggered its stop loss, for a $6.40 credit, down 59 cents per share from the entry price. The return was an 8.4% loss over 29 days for a -105% annual rate.

11:20 a.m. New York time

Every exit strategy requires a re-entry strategy. Here’s mine.

First, a chart of the index showing the decline, including the price piercing the 200-day moving average before recoiling back above.

Screen Shot 2020-02-27 at 8.14.23 AM

If the S&P 500 closes below it’s 200-day moving average and then continues to drop in subsequent days, I shall consider the market to be in a longer-term downtrend and shall rework my trading strategies, using more short options spreads, a great vehicle for trading a declining market.

If the S&P 500 moves above its peak prior to the present decline, 3393.52, then I shall consider the downtrend to have ended and shall return to my normal strategy in bullish times, using the Zacks analysis.

In all cases my decision will also be informed by the Elliott Wave count, which I’ve used in the past. A change of the Elliott Wave analysis to uptrending at a reasonably high level would prompt a re-entry, even if below the 200-day moving average. A continuation of the Elliott count as downtrending would keep me out of stocks even if the S&P500 is above its recent peak.

10:40 a.m. New York time

I have placed the funds freed from the exits into TLT, an exchange-traded fund tracking the 30-year Treasury bonds. It is rising, as it tends to do when there’s an expectation of the Federal Reserve lowering rates. And it pays a dividend yielding about 2% annually. Liquidity, capital gains, a reasonable dividend — not a bad parking spot in stormy weather.

10:10 a.m.  New York time

Eleven positions triggered their tightened stop/losses in the first 15 minutes of trading, and then the sell-storm calmed. One of the positions, REGN, showed a profit. I exited my other profitable positions on Wednesday.

Below are the results of today’s exits so far, in spreadsheet form. (Two spreadsheets, to fit the page width.)

First, information about the positions traded and their portfolios, and the credit received from the trade:

sym portfolio bench credit
APAM momentum x 30.08
DAL sp500 x 46.14
DVA momentum sp500 x 78.77
GIII value 22.07
IBP growth x 64.11
LITE growth 74.10
PHM growth sp500 41.23
REGN genetics 461.67
SNX growth 129.16
STM growth 27.10
TER robotics 59.53

And the results of the trades, in dollars and percentages.

sym return/share$ return% days annualized%
APAM -6.25 -17.2% 20 -314%
DAL -12.67 -21.5% 14 -562%
DVA -9.27 -10.5% 15 -256%
GIII -5.84 -20.9% 17 -449%
IBP -11.17 -14.8% 13 -417%
LITE -18.20 -19.7% 16 -450%
PHM -4.29 -9.4% 27 -127%
REGN 62.83 15.8% 7 +821%
SNX -13.27 -9.3% 22 -155%
STM -3.78 -12.3% 16 -280%
TER -11.62 -16.3% 21 -284%

9:40 a.m. New York time

Before the opening bell I tightened my stop/losses on everything to a trailing percentage reflecting one day’s average movement, using the ATRWilder (average true range) as a basis. The range of stops was from 2% to 4%. And a number have been triggered in the first 10 minutes of trading. I’lll wait until the sell-storm calms and then post results.

By Tim Bovee, Portland, Oregon, February 27, 2020

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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Based on a work at www.timbovee.com.